Peace activist Yoko Ono said in a statement the biennial peace grant, established in the name of her late husband, former Beatle John Lennon, rewarded Lady Gaga for combining her stardom with activism and changing "the mental map" of the world.

Grammy-winning Lady Gaga, who shot to fame with her debut album The Fame in 2008, accepted the award in person in Reykjavik along with a charitable donation that she would in turn give to the Elton John Aids Foundation.

Gaga said: "I'm supremely honoured to accept this grant and award today on behalf of youth empowerment around the world.

"I will be donating this grant to the Elton John Aids Foundation and I will be working closely with them to ensure that the money goes specifically to those orphans and disadvantage youth in America born with HIV or Aids."

Her message was for the world to "breathe compassion".

"We share the same dreams of peace, the same planet. We share the same potential to succeed, so my gift to you is this message, John and Yoko taught me long ago to keep it simple so everyone can understand, so world, breathe compassion," she said.

Last month, Yoko Ono awarded the prize to the members of Pussy Riot - Nadezhda Tolokonnikova, Maria Alyokhina and Yekaterina Samutsevich - at a separate event in New York City.

Tolokonnikova's husband accepted the grant on behalf of the three women, who were handed two-year sentences for staging a "punk prayer" in Moscow's main cathedral.

Samutsevich's jail term for hooliganism driven by religious hatred and offending religious believers has now been suspended following an appeal.

This year's winners of the prize also included peace activist Rachel Corrie, killed on the Gaza strip in 2003, Confessions of an Economic Hit Man author John Perkins and the late journalist Christopher Hitchens.